Belfast Telegraph

Tax change 'will net more workers'

The first raft of painful income tax reform will see more workers dragged into the tax net and those already in it will pay more.

Finance Minister Brian Lenihan announced the overhaul with the declaration: "Our income tax system as it stands today is no longer fit for purpose."

The rates remain unchanged - 20% for standard and 41% for higher - but these figures are hardened by the new Universal Social Charge (USC), replacing the income and health levy, which is essentially 7% on all incomes above the minimum wage.

The minister opted not to introduce a new third high rate of tax which the Labour Party and many left-wing groups have been demanding.

And when earners check their wage slips in the new year, the impact of the widening of tax bands will mean the standard rate takes effect at 32,800 euro down from 36,400 euro.

There has also been a 10% cut in the tax credit system - personal and employees' credits are down from 1,830 euro to 1,650 euro and for married people from 3,660 to 3,300 euro.

Mr Lenihan said the reforms take workers back to levels they were paying in 2006.

Despite the widening of the tax bands, he said the most vulnerable workers, those on the minimum wage, would not be brought into the net.

"Our objective is to move steadily in the direction of an income tax system that is fair, universal in its application and more easily understood," the minister said.

"This Budget marks a decisive step towards a unified income tax system with a minimum of tax shelters, the broadest base and competitive rates."

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